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Since the time of Keynes macroeconomists have been concerned with the effectiveness of stabilization policies in reaching full employment. However no one has provided a convincing argument that this goal is universally desirable. Thus the book's main thesis is that Pareto optimality - the guiding principle of policy evaluation, because some gain and nobody loses - does not apply to macroeconomic policies and that full employment is essentially a political aim. The book is divided into three parts. The first is historical: it examines the limited literature on the optimality of macroeconomic goals and the record of successive governments in achieving the goals they have set. The second part presents a theory of the labor market, and an evaluation of walfare changes from rising or falling real wages. The concluding part looks at public choice decisions, especially those related to spending and taxation, from an individualistic perspective. Although originally intended to show what sacrifices are necessary in collective decisions, the aim is now to maximise your own benefit from government spending and to avoid as much of the burden of taxation as possible.
The resulting free-rider problem' creates budget deficits which are no longer countercyclical but are tolerated because they have no adverse welfare consequences for the current population; instead they leave future generations saddled with extra interest payment on the accumulated debt. A number of possible ways of avoiding unnecessary budget deficits are explored without much hope for success.